JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES debate -
Tuesday, 18 Jan 2005

Bord Gáis: Presentation.

Chairman

I welcome Mr. Gerry Walsh, chief executive officer, Bord Gáis, Mr. Pat Dalton, Mr. Michael O'Sullivan and Mr. Will Roche. I draw attention to the fact that members of this committee have absolute privilege but this privilege does not apply to witnesses appearing before the committee. The committee cannot guarantee any level of privilege to witnesses appearing before it. Further, under the salient rulings of the Chair, members should not comment on, criticise or make charges against a person outside the House, or an official by name, or in such a way as to make him or her identifiable.

We will hear a short presentation for about five or six minutes from the chief executive of Bord Gáis, Mr. Gerry Walsh, and then have a short question and answer session. We have all received the presentation material and I thank Mr. Walsh for sending it in advance because that is very helpful to the members.

Expanding on the findings in the latest report by the British Radiological Protection Board with regard to the safety of mobile phone handsets, the chairman of the board, Professor William Stewart, advised that mobile phones should not be given to young children if there are risks involved. The committee has decided that we must establish if there are risks in the use of mobile telephones and handsets. As I understand it, the report referred to is now being examined by the technical experts in the Department of Communications, Marine and Natural Resources. The issue of mobile phone safety will be raised at an EU meeting of technical experts in early May, at which Ireland will be represented by the chief technical adviser of the Department, Mr. Bob Hanna. The committee has agreed to invite Mr. Hanna to appear before the committee to discuss this important matter and establish what the Department has done regarding the safer use of mobile phone handsets, what technical data it has gathered on such usage and whether there are non-ionising radiation risks in using mobile phones. This has been decided by the committee today and at an early date, Mr. Hanna and other officials from the Department as deemed necessary will be asked to appear before the committee.

I thank Mr. Gerry Walsh for attending today. We are very grateful. This is part of our energy module session. We have been involved with energy modules along with our other work in communications, marine and natural resources in recent months. We hope to conclude that work in a few months.

Mr. Gerry Walsh

We are very pleased to be given the opportunity to address the committee. With me is Mr. Pat Dalton, our chief financial officer, Mr. Michael O'Sullivan, who looks after our transportation division and Mr. Will Roche who looks after our strategy and regulation.

A document was circulated to the committee yesterday covering a range of topics in some detail. I trust the members found that useful. We had intended to use a Powerpoint presentation but inevitably the technology has let us down. I will take a few minutes to look at a number of the slides and in particular the "big picture" issues impacting on the natural gas industry which I know is of particular interest to the committee. This will be a little awkward but from the hard copies of the document supplied to members I will point to the slide to which I refer.

The committee is aware that Bord Gáis was set up in 1976. Over the 30 years of its existence it has grown steadily year on year, starting with providing gas to the IFI fertiliser plant and to the Aghada power station in Cork. The network was then extended to Cork and Dublin and Bord Gáis became involved in providing gas to householders in the mid-1980s by means of the takeover of the towns gas companies.

The residential gas market developed over the intervening years. The steady average growth of about 20,000 houses per annum is currently accelerating on the back of the growth in new housing countrywide. The key driver in this growth in residential customers as reflected in the chart provided was essentially cost effectiveness and environmental benefit.

The map provided shows the current extent of the high pressure gas grid and the main centres of population now supplied with natural gas. The map essentially reflects the development of the business, starting with the Kinsale Head field. The Cork-Dublin pipeline led to the connection of Limerick and Waterford and many communities on the route. Continued demand resulted in the first interconnector being built with the UK. In more recent years a second interconnector was completed with a connection to a power station in the Isle of Man. The pipeline to the west provides a ring configuration feeding the midlands and Galway as well as connections to power off-takes in Aughinish Alumina and Tynagh. I draw the committee's attention to the proposed connection to the Corrib gas field currently under development and to the development of pipelines in Northern Ireland which will be connected to the grid in the Republic by the end of next year. The development of this grid has been enabled by the existence of significant baseload, in many cases an industrial or large commercial off-taker. Extensions to the grid are very capital intensive. They are subject to rigorous economic tests which underpin the board's commercial mandate and are subject to an overview of the regulatory authorities.

Bord Gáis has more than €2 billion in assets and serves half a million customers. Business has been developed without recourse to Exchequer funds and has contributed more than €600 million in dividends to the Exchequer over the years. It has two business frames, one engaged in building and operating pipeline networks and the other, retail activity, which in recent years entered the electricity market. I will not talk about that because it was expressly excluded from the scope of today's discussion.

Bord Gáis employs more than 800 staff. There are up to 2,000 others working in the wider industry with contractors and service providers. The company is financially sound, as evidenced by our strong investment credit rating with both Standard & Poor's and Moody's. In the pie chart in slide 7 one sees that the'lion's share of gas sold in Ireland relates to power generation. This is to be expected as it provides a competitive solution to meeting the growing demand for electricity and reflects what other EU countries are doing in the absence of nuclear energy. Our retail activity has been subject to competition for several years and currently accounts for 49% of gas sales in the Republic of Ireland.

A company called RWE, which is a large German utility, is the second largest supplier. In slide 9 we attempt to reflect the European landscape. In a recent publication the EU Commission has been complimentary on the development of competition in Ireland, ranking us next to the UK and the Netherlands. It is interesting that this is measured by the development of competition and the presence of foreign players in the local utility markets. Accordingly, the liberalisation of energy markets in the EU has led to the development of large international utilities, which grow by acquisition across borders. Slide 9 shows on the right-hand side the relativity of some of those players compared to the size of Bord Gáis.

Slide 10 shows that our main points of focus for the future are as follows: to provide a safe and reliable service for our customers; to ensure a quality service to customers as our business model changes, with the advent of the opening of the full market; managing the full market, from October 2005; and it is imperative to grow the business where there are viable opportunities.

Slide 11 shows our main priority as a company is to provide a safe and reliable service to our customers. Our track record in this regard has been quite good. We manage all our networks in accordance with best international practice. Accordingly, we have been engaged in systematically replacing our older networks over the past 17 years. We have replaced two thirds of them with modern polyethylene pipes. During 2004 we developed a plan in conjunction with the energy regulator to renew the final third of the system over the next five years. This project is now being put in place.

The accelerated renewals plan is being driven by a number of issues. A pipe failure in Rathfarnham led to an incident there about a year ago and there is a proliferation of construction activity and excavations on our streets which often impacts on our networks. Local authorities are becoming more and more impatient at having new pavement disturbed for maintenance and repair and there are operational efficiencies to be gained from having an all-polyethylene network.

Chairman

Has the investigation into that incident concluded?

Mr. Walsh

Yes, it has.

Chairman

What was the cause?

Mr. Walsh

It was caused by cast iron pipe failure, exacerbated by local subsidence.

Chairman

Was that to do with the road network?

Mr. Walsh

It had to do with the sub-structure, the soil and so on underneath the road.

Chairman

Bord Gáis has now accelerated its programme for replacing cast iron with polyethylene piping.

Mr. Walsh

We had intended to replace the system over a ten to 15-year period and the aim of the new project is to reach that target over five years.

I know the question of gas prices is of particular concern to members of the committee. I have a number of points to make in this regard. The gas price in the main comprises the cost of the commodity and the transportation tariff. The remainder of the price is accounted for by the operational cost and the margin. In the UK wholesale market, where we buy our gas, Bord Gáis is a price taker because of its size. The committee will be aware that the wholesale price has increased twofold in the past five years. The transportation tariff, which pays for the pipelines, is based on a regulated formula in line with industry practice. The recent suggestion in the media that Bord Gáis is overcharging its customers in the transportation tariff area has no basis. While the gas price in Ireland has been increasing in recent years, it also has increased in other countries. The delivered price to residential customers in Ireland is the fourth most competitive in the EU and is well below the average.

This slide is based on data published by the Commission in recent days, reflecting comparative prices in the household sector as of last July.

Chairman

Is Mr. Walsh referring to the allegations by a Sunday newspaper and an energy expert from the UK who worked for Bord Gáis at one stage?

Mr. Walsh

I am.

Chairman

Is he suggesting that there is no element of overcharging in the increase Bord Gáis received, at 10.9% for households and 16% for non-household clients?

Mr. Walsh

Absolutely. That is being driven by wholesale prices rather than by any tariff issue.

I refer the Chairman to slide 16. In comparing our prices with others in the EU we have updated our price for comparative purposes with the October increase. The prices members of the committee have in front of them are, in general, for July and ours have been updated to take into account the last increase in October.

The cost of home heating with natural gas is consistently cheaper than other fuels and the price has been more stable over the past five years. The graph in slide 19 contains published data from Sustainable Energy Ireland, SEI, as well as industry data reflecting that point. It is interesting that the cost of heating by natural gas in the average home is about equivalent to the average mobile phone bill.

Slide 29 deals with a crucial policy issue as regards natural gases, security of supply. In considering the adequacy of security for our market we have attempted to evaluate for the short, medium and long term from local, regional and global perspectives. We have provided significant material on this issue in the submission. I will now focus on the summary slide. Our needs are met by a combination of indigenous suppliers — as well as supplies from the UK. Our local sources contribute to security and diversity in the short to medium term. Within the long term in the absence of finds on offshore Ireland we must look to security of the UK market in order to secure ours. In evaluating the supply alternatives to the UK, there are a myriad of pipeline projects capable of delivering new supplies far in excess of current needs. One may expect this because the UK is probably the most developed residential market in the world.

In the past natural gas was only a local and regional market, which was defined by the catchment area of the pipelines. Now, however, the growth of liquefied natural gas, LNG — that is, natural gas transported on ships — is creating a global market for this commodity. This radically improves security, not just by creating a more diverse local portfolio but it allows the development of new sources of gas from fields that were inaccessible in the past because of the absence of pipelines. A good example is in Qatar, which has the biggest gas field ever discovered but yet is not producing. This will now be exploited through the development of global LNG. Over the coming years LNG has the potential to change the gas market in a radical way. That is the extent of my presentation. I thank the committee for its patience. I will be happy to attempt to answer any questions.

Chairman

Before calling on Deputy Durkan, Deputy Broughan and Senator MacSharry, in the course of his answers Mr. Walsh might refer to the telecom side of Bord Gáis's business. Although there will not be much time to discuss it today the committee is keen to hear something about it.

Deputy Durkan

I thank Mr. Walsh for his presentation. I have a couple of questions. Recently, the committee expressed concern as regards the reserves of gas available and the dependability on such reserves. Perhaps Mr. Walsh will give us some indication of his read on that issue. It might have considerable significance not only for Bord Gáis but for the country's entire energy structure as well as well as for our neighbours. Likewise, I would like to know the extent to which the interconnectors can be relied upon at this stage and the degree to which Bord Gáis and ultimately consumers will be able to rely on the ability of the interconnectors to continue supply in the future.

As regards exploration, the Corrib field has been mentioned as well as future finds. Are there grounds for believing that developing technology will lead to new gas fields? I presume because of pipe fracturing, cast iron pipes will no longer be used. When will the replacement of existing pipes be completed, given that the schedule for it has been altered? Will Mr. Walsh develop the comparisons made in the presentation on the home heating costs to the consumer of different energy supplies? I am sure other members will wish to raise other issues.

Chairman

We will bank the questions and Mr. Walsh and his colleagues can then share them out.

Deputy Broughan

I welcome Mr. Walsh and his team to the committee. My colleague has asked about gas pricing, particularly for households. We received many complaints about Bord Gáis in the past year, for example, that the company is engaged in creating, as one e-mail correspondent stated, a "gold plated" network, and that this was being done not primarily for safety reasons but to enhance the value of the network and the company, given possible future developements in regard to the company. Is there any truth in the assertion that the company is gilding the lily and that much of the company's profits have been deliberately invested in this way? I note that the gross and net margins are not given in the briefing. I accept the point that money has been returned to the Exchequer. There has been commendable progress in recent years in extending the gas network, but it has not been extended to the north west. Will that change when the Corrib field comes on stream? I do not have the up-to-date EUROSTAT figures but I understand from media reports that prices for households have gravely accelerated since 2001 and gas, which was once a cheap source of energy is now becoming a significant household bill. Purchasing power parity comparison figures for business consumers are given in EUROSTAT but I do not see such a reference for households in the download I have. Is it not the case that the increase in the price of gas has been dramatic and that a decision could have been made to return some of the profits to householders? The known reserve of gas is 67 years and oil is 41 years at current levels of production. Will the developments in China and India and the changes in the world economy not cause these reserves to be drawn down more swiftly? We have seen evidence at this committee of companies such as Shell totally misleading the markets on the available reserves. In that context, is it not a dangerous position for Ireland that possibly two thirds of heating energy will come from gas and the bulk of electricity will be generated from gas? Should we not look at renewable sources of energy?

Chairman

I propose that Mr. Walsh and his team answer these questions before I call Senator MacSharry.

Mr. Walsh

First, I will deal with the question of pipe fractures. We have accelerated the replacement programme and expect to have all the old cast iron pipework replaced within a five year period. In the past the timeframe was a ten to 15 year horizon.

The exploration for gas and oil offshore Ireland has not been that fruitful and certainly from the statistics produced by the oil sector, to define hits per hole drilled or per well drilled, offshore Ireland has performed very poorly. In the medium term, it appears the Corrib pipeline will deliver a significant volume of gas into the system — of the order of 30% of a peak day — and that will be sustained for quite a number of years. The two interconnectors are up and running and are fully operational. In slide number 30, the projected demand for 2010 of 30 million standard cubic feet a day can adequately be served by the existing infrastructure. One of the features of the Irish gas network is that it has adequate capacity for several years and has the capability to deliver further capacity for relatively small amounts of investment in additional pieces of pipe onshore in Scotland and some additional compression. The major construction and capital spend on infrastructure from a security and supply point of view is certainly in place and there is no need to spend those moneys again. There is still some capacity in Kinsale and members may be aware that Kinsale has some capacity for storage, where gas is essentially pumped back into the old well and used on peak days when supply and pricing can be reasonably tight.

I will ask my colleague, Mr. Roche to comment on reserves, but I have an anecdote about reserves. Our view is that what is being declared is likely to be there. Someone from one of the oil companies told about an oil reserve offshore Africa. Natural gas, which is readily available from this reserve has been re-injected into the hole for pressurisation or flared off. With the development of LNG, liquified natural gas and the shipping technology, this reserve will deliver natural gas and that is not counted in any of the figures. I have a sense there are many peripheral activities in the sector that could deliver more supplies than is accounted for in our figures.

Mr. Will Roche

A link was made between renewable energy and natural gas. It is not an "either/or" situation. There is a vast scope in the requirement for renewable energy, it is not one or the other. Representatives of the gas industry have spoken of it as being a bridge. We need to get from current almost total dependence on fossil fuels to having a far greater role for renewable reserves. Gas provides us with a way of getting there in an environmentally and economically friendly manner. That is the task before us. It is a not a question of one or the other, but of creating space to allow us to move from one to the other.

With regard to reserves, there are two issues. We get our supply from the UK, which is almost unique in Europe as it is self-sufficient in gas. However, its reserves are depleting and in time it will have to import gas. There are a queue of projects in place to bring more supplies into the UK, such as a pipeline from Norway, a second inter-connector link to Holland, as well as increasing the capacity of the existing link. The biggest thing happening in natural gas is the growth in LNG, which is the movement of gas by ship. As the technology in this area has greatly improved, it is getting less expensive to move gas by LNG. There are a number of projects coming up for the UK in the next few years, which will improve its situation. There is even the prospect that the UK will be oversupplied in the next three or four years. The depletion in its reserves may be filled twice over by what is coming on-stream.

In the research for today's presentation, I have depended on the IEA's World Energy Outlook, which is also supported by the US Geological Survey. I genuinely believe that there are around 65 years of gas reserves available relative to production, which is considerably more than oil. There are much more untapped gas reserves than oil reserves, so this can give us the ability to bridge from where we are to a renewable world. In 2002, Europe produced around half of its own supplies and the rest came from Norway, 25% from Russia and 13% from Africa. In the reference table for 2030 provided in the survey, the mix has broadened quite a bit. Russia will still provide a quarter of Europe's requirements, but Africa will provide that amount and the Middle East will provide 18-20% of requirements. Europe's own production will fall somewhat. In the near term, about 30% of Europe's requirements are provided by LNG, but this will rise to 50% by 2030. The supplies will come from a much wider range of countries and from further distances. The issues will become more political in the longer term. There are issues at EU level in its relationship with the gas producing countries and the stability of the political regimes in these countries.

Mr. Walsh

There was a point made about the use of gold plated networks to enhance our value. Nothing could be further from the truth. We have a commercial mandate and we only spend money on investments where there is an economic case and where we can get an economic return. The engineering standards we use are the normal standards for a gas utility. We have been successful in securing pipeline licences in Northern Ireland and that would suggest that we are competitive in building and operating networks.

We have no particular plans to build pipelines in the north west, but I am aware the regulator is looking at the requirement there. Slide number 16 in the presentation reflects the EUROSTAT statistics published in recent days. The numbers are from July 2004 and we have included the last price increase in the Irish system for comparative purposes. We compare reasonably well with other EU countries including the UK, which is a highly competitive market where the penetration of natural gas in the domestic sector is around 90%.

Senator MacSharry

I welcome the delegation here today and thank them for their presentation. Looking at slide 6 of the presentation, there is a gaping wound in the north west. This is not surprising as it refers to other things, not just gas. I am extremely disappointed to hear that there are no plans by Bord Gáis to put any extensions to the grid to incorporate this area. In particular, I am thinking of gateways such as Sligo and Letterkenny, and hubs such as Longford, Ballina, Tuam and other towns such as Buncrana. Bord Gáis is occupied in commercial profitable activity in Northern Ireland and does not focus on a mandate of the people, yet it is a State owned company. While I know there is no public service obligation, there must surely be a service conscience to that area. Bord Gáis is a Cork based focus that has done fantastic work. So many towns are linked to the grid and they have a great choice in energy options. What about the other sections? Surely one could identify the growth that will come to gateways and hubs in this area.

Almost €500 million is to be invested in industry and service provision in Sligo in the near future. If the head of finance in Bord Gáis does not see the commercial sense of linking up Sligo, Letterkenny, Buncrana, Ballina and Castlebar, which is so close to the Corrib field, I find that phenomenal. Surely Bandon does not purport to have as many homes or as much industry as Letterkenny or Sligo. With all due respect to the people of Ballinagh——

Chairman

Is the Senator referring to Ballina in County Mayo?

Senator MacSharry

No, I refer to Ballinagh down in the south. We in Sligo, Donegal and Longford could surely supply more users of natural gas than such a town. I ask Bord Gáis to have a full review of its plans for that area, rather than telling us that the regulator may look at it. This is a section of Ireland where land prices and construction costs are still reasonable. I find it phenomenal that Bord Gáis has not looked at this in detail, yet in the way of the old British colonialists, it will go into the Sligo and Mayo coasts and reap the rewards of the Corrib field through Enterprise Energy Ireland to bring them to the motherland of Cork and elsewhere. It is inconceivable that Newmarket-on-Fergus, for example, a thriving dormitory town of Ennis, Limerick and Shannon, would not be included. Why is it not included? In the context of the strategic policy of Bord Gáis going forward, does the national spatial strategy mean nothing? Is there cognisance of the aspirations and principles underpinning the strategy? Is it simply about the bottom line?

We do not want a situation similar to that at An Post but a State company should supply a service. The north-western area is a gaping wound but while I speak in favour of Sligo, we will hear about all areas. What I have stated makes sense, certainly in the long term if not during the term of office of the Bord Gáis officers who are present. It would make sound economic investment sense to consider the gateway hubs and stop focusing on the bottom line, which is the business of entrepreneurs. I put it to Mr. Walsh that Bord Gáis has an obligation to the people of Ireland and particularly those in the north west.

Chairman

We will give Mr. Walsh a chance to reflect on that point.

Deputy Eamon Ryan

If Mr. Walsh was a betting man, in percentage terms how would he assess the chances of having another major gas find in Irish waters? Why did the wholesale price in the UK double in the past five years? Mr. Walsh made the point that we are moving towards a future involving renewable energy. The outlook defined in his presentation shows the projected total primary energy demand in 2020 as being oil, 46%, gas, 42%, coal, 9% and renewables, 3%. Is that sort of transition to a new renewable economy an accurate reflection of the type of transfer that will occur? Will 3% of total energy demand in 2020 be in renewables?

Will Bord Gáis consider establishing an Irish LNG facility or will we be totally dependent on the UK market to provide for us in the future? How long would it take to build an LNG facility, what would be its approximate cost and has Bord Gáis examined any potential locations for such a facility?

The committee heard a presentation from a Cork resident, Mr. Colin Campbell, who is one of the leading members of the peak oil movement and a former geologist who was involved in exploring Irish waters. His analysis and that of many involved in the global oil and gas market is that, if we have not already arrived at it, we face a peak in global oil production followed shortly by a peak in global gas production, possibly in the next ten to 15 years. This is the crucial figure; it is not the number of years' reserves left but the point at which production begins to decline or where demand exceeds production.

With regard to production decline, there is a contrary view to the one Mr. Walsh cited in the context of the International Energy Agency, IEA, which is gaining significant currency and which was presented as a plausible scenario to this committee before Christmas last, namely, that the production plateau for oil is already at hand and that it is not far off for gas. What does Mr. Walsh think of Mr. Campbell's theories and the Hubbert peak production theories that are an alternative position to that of the Geology Society of America and the IEA? As a caveat, reading between the lines of the last IEA report, I note a subtext in which the agency is beginning to readily admit a serious issue arises in regard to stated reserves, certainly for oil but with a related concern for gas. I am interested to hear Mr. Walsh's views on this aspect.

There are valid concerns. If this was an energy committee charged with investing in electricity plant here which might have a lifespan of 30 years, what other measures might we introduce to secure such supply rather than relying on the UK wholesale market, if we are not to have our own LNG facility?

Deputy Keaveney

I was not long in the Dáil when I went to lodge a cheque in the Bank of Ireland branch on St. Stephen's Green. When the bank assistant saw that my address was in County Donegal, I was asked whether I wanted the money in pounds sterling or punts. This is a similar case of "heads you lose, tails you lose also". Bord Gáis has no plans to develop in the north west.

As a county councillor, I was a member of the north-west regional cross-Border group on which the councils of Derry, Limavady, Strabane and Donegal worked together on a number of projects, one of which was in regard to the improvement of infrastructure. A central part of this centred on a gas pipeline which was not called the Belfast-Derry pipeline but the Belfast-Letterkenny pipeline. It is disgusting to hear that a State organisation would have such seeming prejudice against the north-west region or state it has no plans to develop there. While I might be wrong, from my experience of being a member of the relevant committees, I thought we were talking about a pipeline from Letterkenny to Belfast.

"Cross-Border links" is a sexy phrase thrown out by organisations which talk of interconnectors between countries. Within Ireland, the sexy project is the one between Belfast and Meath. However, I got the impression there were to be cross-Border connections and, therefore, I thought the second project we were talking about was the Letterkenny-Belfast project.

The issue seems to be sexy when it comes to seeking INTERREG funding or Government support for projects. However, it does not seem sexy enough to deliver a pipeline to an area which has one of the fastest growing populations in Ireland, if not Europe. Under the national spatial strategy, Letterkenny is a gateway town. I repeatedly asked in the Dáil whether there would be a spur pipeline to Buncrana and the question was repeatedly asked by the north-west regional group as to whether Strabane would have a spur pipeline from Derry. It was not a question of whether the pipeline would go to Letterkenny. Suddenly, a feasibility study was carried out to find whether it was feasible for a pipeline to run to Letterkenny. One of the questions asked in the study was what the local community had lost by not having gas. How can it be proved what one has lost because one does not have the necessary infrastructure?

An example may illustrate my point. My brother lives in Cobh, County Cork, and I use the local ferry when I visit him. Despite there being a finite number of people on Cobh island, the ferry goes over and back to Passage West every ten minutes and there are always customers. The man running the ferry told me he never asked why this was because the ferry was never empty. A ferry was introduced on the Foyle and in its first two years of operation some 700,000 passengers used it. It is a chicken and egg situation because it is said there are not enough people or interest to get the gas.

I do not know whether the regulator should intervene but this is not something we should have to fight for with a State agency. The map speaks for itself. Unfortunately, as Senator MacSharry stated, the map does not speak for itself in regard to gas alone. This corner has been fought with different boards and there has been a similar fight in regard to improving east-west cross-Border road, rail and air links. When I am asked whether I want everything considered, I reply that I simply want what everyone else has. I declare my interest in representing Donegal North-East and Inishowen. I concur with the points made by Senator MacSharry and I thank the Chairman for the opportunity to contribute.

Deputy Perry

It is a change of Government that is wanted.

Chairman

There are two sets of serious questions from the representatives of the north west as well as those from Deputy Eamon Ryan. We will then go to Deputy Kelly, Deputy Ned O'Keeffe, Senator McHugh and Deputy Perry, the Vice-Chairman.

Mr. Walsh

Regarding network development in general, Bord Gáis Éireann is well disposed towards growing the network. It is our core business and our track record over the years has been to extend the network wherever possible. We are mandated by the gas Acts to execute economic projects that will earn a reasonable return on investment and all extensions are evaluated on this basis.

The network is paid for by customers through the gas tariffs. If we were to add uneconomic projects with the blessing of the regulator, gas prices would increase. This is what drives our decision making. The criteria for evaluation of network extensions are set by the regulator in order to achieve a balance between growing the grid on the one hand and competitiveness of gas prices on the other.

Regarding gas finds, the committee may be aware that exploration and production——

Chairman

When the committee concludes its deliberations on this issue, I have no doubt that one of its recommendations will be the completion of the gas grid. I ask Mr. Walsh to bear this in mind.

Mr. Walsh

I am aware that the CER has undertaken a feasibility study on further extensions to the north west but I am not privy to the outcome of that study.

Senator MacSharry

Has Bord Gáis Éireann undertaken its own study? I understood DKM Economic Consultants had done such a study on its behalf in recent years.

Mr. Walsh

No, DKM Economic Consultants did a study for the regulator.

Senator MacSharry

What were the findings of this study? I understood there was contact with Connacht Gold Co-operative Society and a number of other employers and major energy users to ascertain the costs required in the Sligo area. I am sure similar calculations were made for Donegal. I recall a figure of £700,000 per kilometre was mentioned at the time. Can the delegation confirm this figure? I appreciate the easy option is to refer to the gas Acts and so on. However, we must be proactive and consider the impact of introducing some degree of subvention, notwithstanding the difficulty of such an action under EU competition regulations. It is for this committee and the Oireachtas to try for such an approach.

Can the delegation at least indicate the cost of getting gas to specified locations in a manner that will be profitable for Bord Gáis Éireann? These areas are going to grow. Is the delegation contending that it pays more in the long term to go to Bandon and Ballina rather than Sligo, Letterkenny, Buncrana or Tuam, for example?

Chairman

A number of questions have been raised, some of which Mr. Walsh may not be in a position to answer today. Mr. Walsh might like to consider these and report back to the committee from an informed position.

Mr. Walsh

That is fine.

Chairman

Mr. Walsh should respond now to any questions for which he has immediate answers. However, he will appreciate the seriousness of the questions raised by members from the relevant area. The committee would appreciate a considered response, if such is required, to the question of the laying of the future gas network for that part of the country.

Deputy Keaveney

Mr. Walsh made the point that the network is paid for by the consumers. Is INTERREG funding available to assist infrastructural development in areas in which such is not initially economically viable? I understood some €12 million was set aside for the Belfast to Letterkenny gas link so the cost of this development would not all come out of the pocket of the consumer.

Mr. Walsh

I cannot comment on INTERREG funding as it is an area with which I am not familiar. I can report back to the committee on this issue.

Chairman

The committee would appreciate if Mr. Walsh can report back on that aspect. It is an issue with serious implications for his company. Mr. Walsh has a measure of the depth of feelings of members in this regard.

Mr. Walsh might address the questions to be put by Deputies Eamon Ryan, Kelly and Ned O'Keeffe.

Mr. Walsh

On the issue of gas supply, the exploration and production business in oil and gas is risky. I cannot give a figure as to the likelihood of further finds offshore. The performance in terms of hits per hole drilled is——

Deputy Eamon Ryan

Has the hit rate been slim, medium or high?

Mr. Walsh

If the past is any prediction of the future, the outlook is poor.

Regarding wholesale prices in the UK, there has been a supply-demand squeeze in the period from 2000 to 2002 between what was available offshore and the demand onshore. As a result, wholesale prices increased. However, I also understand that operating costs for the producers increased significantly during that period.

In regard to the primary energy demand, the numbers included on slide No. 24 of our presentation are taken from the ESRI medium-term review. These figures contain all the relevant policy data regarding the elements of the mix into the future.

Deputy Eamon Ryan

The LNG facility due to open in 2007 in Milford Haven, for example, will produce some 6 bcm per annum, which is almost enough to meet Ireland's gas requirements. Is any such facility envisaged for Ireland?

Mr. Walsh

The LNG facility in Milford Haven is massive. While its initial delivery is of the order of 6 bcm, it has a capability of the order of 23 or 24 bcm. It is a business that requires a lot of scale and the question of whether such a facility should be provided in Ireland is one that should be considered. Our evaluation of the security of supply suggests it is a long-term local issue.

Deputy Eamon Ryan

: However, we are otherwise completely dependent on supply from the UK.

Mr. Walsh

We can also avail of what is available offshore Ireland. Corrib will run on for some time.

Deputy Eamon Ryan

That will no longer be there in ten or 15 years.

The concept of a peak in global production, "Hubbard's peak", is contrary to the view expressed by Bord Gáis Éireann. Has the board undertaken any analysis on this issue?

Mr. Walsh

It is fair to say that we have seen both sides of this argument. The committee has had representations from other delegations indicating that current projections are inadequate. There are other views to suggest they are understated in the context of the agenda of an exploration and production company wanting to pitch the proposed reserves at what would be seen as a reasonable level rather than overcooking or understating them. We have no independent view in this matter.

Deputy Eamon Ryan

In what year does Mr. Walsh believe gas production will peak?

Mr. Walsh

I have no number for this in a worldwide context.

Deputy Eamon Ryan

Can Mr. Walsh indicate any timescale, whether it will be in 20 or 30 years?

Mr. Roche

I estimate it to be in more than 20 years' time.

Deputy Eamon Ryan

After that, given that demand is likely to continue increasing, will we see significant price increases year on year?

Mr. Roche

Yes, although this is premised primarily on the views of Dr. Colin Campbell.

Deputy Eamon Ryan

Can Mr. Roche confirm that he believes the peak in global gas production will take place in 20 or 25 years' time?

Mr. Roche

I am quoting figures from the International Energy Agency. We do not have an independent view on this aspect.

Deputy Eamon Ryan

On the basis of long-term investment decisions for the State, if we are looking at a horizon of 30 or 40 years, is it the case that we would be investing in facilities for which we know there will be declining availability?

Mr. Walsh

At this time, we are in transition and there is no doubt that LNG is changing the landscape. As time passes, there will be greater clarity as to what is available. Even though a country such as Spain has been using LNG over the years, we have not seen the full potential of the development. I agree with those who have described it as a revolution in the gas industry.

Deputy Eamon Ryan

In terms of securing supply for Ireland, is it the case that LNG is not yet being considered and that we are continuing to rely on the UK?

Mr. Walsh

LNG is not being considering directly.

Deputy Kelly

I welcome the delegation from Bord Gáis Éireann, which is a successful semi-State company. It is well-run, returns good profits, is capable of funding its own developments every year and is environmentally friendly. Along with my colleagues, I look forward to the day when full nationwide coverage is available for natural gas.

Under the current criteria a significant amount of grant aid would be required to bring gas to other parts of the country, such as Longford. Gas should be available to the people of Mayo, Sligo, Leitrim and Longford as it would be handy to run the pipe through those counties. Could the chairman and chief executive of Bord Gáis and the Chairman of this committee work together to make a case to the EU to provide grant aid for the infrastructure required to bring gas to areas such as Longford? Longford is a RAPID town and parts of the county are in a CLÁR area.

I thank Bord Gáis for its many visits to Longford over the years to explore the possibility of bringing natural gas to the county. Hopefully, a gas supplier will apply for a licence to lay the pipe work and supply natural gas to the county. I welcome the commitment of the chief executive of Bord Gáis to expand the network. The company is under constraints with regard to the criteria that apply to its trading position but, hopefully, that might change. However, we are anxious to find a solution to the problem with the counties on the western seaboard. Perhaps the Chairman of the committee and the chief executive of Bord Gáis will use their influence and expertise to secure funding from the EU to expand the network.

It is a pleasure to welcome a successful semi-State body. We take great pride in how Bord Gáis is run. It is accountable and is doing its best to adhere to the criteria laid down for the company. It has been more than successful in its endeavours and I wish the company continued success. I look forward to the day when, in the case of Longford, the company will not require grant aid but will simply arrive there and lay the pipes.

Chairman

Will the pipes be laid with the broadband the county was successful in securing?

Deputy Kelly

Thank you for the broadband as well, Chairman. You had much to do with it. That is the reason I ask you to get the same result with the gas. You were instrumental in getting broadband to Longford town, Granard and Lanesboro. I understand it will shortly be brought to Edgeworthstown. If you do as good a job on the gas as you did with the broadband, I will be more than happy.

Chairman

You underestimate your abilities, Deputy.

Deputy N. O’Keeffe

I welcome the representatives of Bord Gáis. It is a relatively new company, having been set up in 1973, and it has made significant progress. Over the years increasing demands have been made on the company for expansion. I remember the company being criticised in my county when it was not expanding into the industrial base. Now we have town gas. The company has come a long way in its 30 years of existence. Well done.

I have a few questions. I recently attended a meeting on competitiveness held by the committee on enterprise and employment. There was a discussion on the horticulture industry in north Dublin and Ireland generally and on gas pricing. The Dutch industry is far more competitive than the Irish industry due to the fact that natural gas is cheaper in Holland for the horticulture industry. That puts the Dutch in a competitive position in that sector. The horticulture industry in Ireland, especially in north Dublin, is getting smaller because of high costs. Fuel is one of its great costs.

Pages 16, 17 and 18 of the company's submission deal with pricing. There are three categories of prices. In the natural gas for households category, Bord Gáis is competitive and is placed fourth in the league, as it were, with the Netherlands at fifth place. However, the Netherlands is third in the small business category. Is the story I heard at the other committee last week accurate? Is it correct that the Dutch have a concessionary gas price for the horticulture industry? If so, they would be in breach of an EU regulation in that regard because it would be unfair competition from our point of view.

Why is the price categorised into three categories? Why is there not the same price for industrial gas supply and household gas supply?

Mr. Walsh

I am not in a position to give a specific answer regarding the group mentioned by Deputy O'Keeffe but I will be happy to come back to him on it. With regard to how the tariffs are structured and why there are different prices for different loads and so forth, perhaps Michael O'Sullivan will respond.

Mr. Michael O’Sullivan

This relates to the unbundling of the gas industry and opening it to competitors. Up to a few years ago Bord Gáis offered what we call a "bundle gas price". This means that customers paid for the gas and the pipes together as a bundle price. To facilitate competition, we have now unbundled our business into, effectively, an entity that offers pipe services and an entity that supplies gas. The entity that offers pipe services does so on a common basis to all customers. There is a methodology involved of valuing the pipes and establishing rates of returns which the independent regulator oversees. The objective is to charge fairly across all customer segments.

What drives gas infrastructure costs is pipe sizes. People who use more gas on a peak day use more of those pipes relative to their usage so there are varying prices for different users. What tends to happen is that the small user tends to use gas on a more peaked basis so he pays relatively more than the large user who tends to use it on a level basis. One of the features for the future is that, due to this new era of transparent prices and everybody being charged the same, specific deals for particular sectors will not be part of the new order. In the past, before the unbundling of the industry, we could price against competing fuels and offer predictive prices to sectors that were more vulnerable where that was justified but in the new world of equal prices for everybody we are constrained and must charge the same for pipes if there is similar usage, whether the customers be growers or industries.

The scope for competition or for differentiation in price, therefore, comes back to the other components of the price, which are the gas and the service parts. Given that most competing companies must pay world prices for the gas, there probably will not be as much differentiation in that area. While in the past special deals could have been done for certain sectors, that will be difficult, if not impossible, to achieve in the future.

The regulator is independently appointed to look after the interests of the customers. He ensures that what we charge for pipes is fair relative to the assets in place and that it is equally applied to all customers. That is the focus for the future. We are focused on trying to do that as efficiently as possible and in consultation with the industry in defining rules. Where we can bring value in the future is in terms of the pipes.

Deputy N. O’Keeffe

When Mr. O'Sullivan speaks about the industry, to whom is he referring?

Mr. O’Sullivan

I am referring to all industry users other than domestic users. Our prices are published and apply to all customers.

Deputy N. O’Keeffe

Last week the north Dublin growers made the point that they were not able to compete in the area of horticulture with the Dutch who have cheap fuel in the form of natural gas. They claimed that the price was lower than it was in Ireland.

Mr. Walsh

I suggest we revert on that issue because——

Chairman

When our guests are in a position to provide a comprehensive response, they may do so by e-mail. The latter will then be included as part of the presentation. Does Mr. Walsh wish to respond to Deputy Kelly's point? Three compelling arguments were put to him today in respect of extending the grid.

Mr. Walsh

As stated, it is part of our core business. When there are opportunities in economic terms to do so, we embrace them. Deputy Kelly will be aware that we have considered the position of Longford on a number of occasions to see how it might be economic. We have not had a positive result in that evaluation. However, we would be happy to revisit the matter as suggested.

Chairman

Will Mr. Walsh communicate further with us on it? As stated, it will probably be an important core recommendation from the committee when it concludes its deliberations on the energy module.

I welcome Senator McHugh to his first meeting and ask him to make his contribution.

Senator McHugh

I thank the Chairman and welcome the representatives from Bord Gáis. I also represent the north-west region. If one looks at the map and the proposed extensions of the grid from the Corrib, one will be obliged to ask why such an extensive area of the country is being discriminated against. I accept Bord Gáis must adhere to economic criteria but this is discrimination. There are other criteria which must be considered. For example, Bord Gáis is a semi-State body and the larger part of its accountability is to the State. People in County Donegal or County Mayo pay the same amount of tax as people in County Cork or County Kerry and we expect the same return from those taxes in service delivery.

Rather than engaging in a process of recrimination with the representatives of the board, I would prefer to take a different approach. Mr. Walsh has indicated that he will follow-up on this matter in the form of a review. It is stated the board is keen to pursue extension opportunities. I, therefore, ask it to make contact with industry representatives in County Donegal because there are opportunities there.

As regards the political dynamics, Deputy Keaveney — I am disappointed that she is not here at present — highlighted that County Donegal is far away. I agree with her. It is on the periphery of the periphery. However, it is surprising for a member of a Government party and for Senator MacSharry to make recriminatory remarks about a good and excellent semi-State company. Perhaps Bord Gáis is merely following Government policy. As the Chairman is aware, there has been a €600 million underspend of national development plan funds in the BMW region. That is taxpayer's money which has not been spent. It is, therefore, somewhat rich of Senator MacSharry and Deputy Keaveney to start shouting and roaring as if they were in opposition. They are members of a Government party which is accountable to the people for the distribution of funds and taxpayer's money.

Chairman

We try not to engage in politics at this committee. We have had a good relationship for the past two and a half years and have never argued. On occasion new members such as the Senator may not realise this and might go off in a particular direction. I ask him to reserve that type of statement for the Seanad Chamber. He will be seeking something to say at next week's meeting of the Seanad. He should repeat what he has just said in the House.

Senator McHugh

I will conclude——

Chairman

We have guests present at the meeting. If the Senator wishes to make political speeches, he should do so in the Seanad.

Senator McHugh

——by saying I do not blame Bord Gáis for pursuing its current policy because it is being led in that direction. It believes this is the way forward and that the north west should be excluded. We can renegotiate and reconsider the possibilities and opportunities for the north west. A schoolchild looking at the map to which I referred would ask why the region was being discriminated against and excluded. We are mature enough to have a working relationship and should follow up on this matter.

I commend the two Fianna Fáil representatives to whom I referred on their excellent Opposition-like skills.

Deputy Perry

I welcome the representatives from Bord Gáis. Arguments have been put regarding the lack of investment in the west. It is ironic that gas is being removed from the west via the Corrib field. There was massive controversy regarding the planning of this development; An Bord Pleanála was involved and several different appeals were made. When one looks at the map, it is extraordinary to see that there is a pipeline to Galway. Business is all about profitability. I congratulate Mr. Walsh on the company's success. It is welcome to hear success stories about semi-State bodies with good management teams. Bord Gáis is clearly unlike other semi-State bodies in that it has a plan of action.

It is extraordinary when one looks at the map and sees the term "North-South development". I welcome the expansion of Bord Gáis into Northern Ireland. However, we are discussing equality of access and services and the stacked up costs involved in doing business in the west as opposed to the east coast or the south. The costs are considerably accelerated. An industrialist seeking to set up operations in the west would be discouraged if he or she looked at the map. What we have been presented with is not good enough.

Mr. Walsh has stated it all depends on the criteria set by the board. It is stated investments were made on an economic basis in line with the board's criteria and the company's commercial mandate. What is its commercial mandate for the west? Does it have such a mandate for the region? Let us consider the scale of development in the North-South region and what is happening in the six counties north of the Border and the six south of it. In the past 30 years the scale of loss has doubly accelerated in the six Southern counties. The scale of development in these countries has been minimal when compared to that, on foot of British investment, in the six Northern counties. Mr. Walsh may state what is happening sounds good to the North-South bodies but if it does not benefit counties which have been affected to the greatest extent during the past 30 years — this is clearly evident, not only in terms of the infrastructural deficit — what is the point?

Two of the six Southern counties are covered in the documentation provided but it is clear none of the counties on the western seaboard have been developed in any sense. Senator McHugh referred to the BMW region and the huge incentives available. Why has Bord Gáis not taken advantage of these incentives, particularly those relating to taxation? I find it extraordinary from my perspective as a business person that it has not provided for a level of development on the western seaboard and that it is removing gas from the region and piping it to homes and businesses in every area of Ireland other than that from which it came. Perhaps when there is a Taoiseach from the west — I am confident this will happen — he will put a stop to this behaviour and that gas will not be removed from the region. While I do not wish to be political, I must make that point. Perhaps the only hope we have in the west is that the Taoiseach will come from there. It is difficult to stand this map up politically but can Mr. Walsh explain, given his mandate and the profitability of his company, why development in this region has not been targeted? Bord Gáis has a deal with Flogas regarding five towns in the west. Will he explain the contract? Are there plans to encourage Flogas to accelerate its development in the west? Flogas is the main distributor of bottled gas and it has a monopoly. Is Bord Gáis developing a monopoly as an exclusive supplier or will new companies enter the market?

Deputy McHugh

I refer to the red line on the map between the Corrib gas field and the Galway-Dublin pipeline, which looks lonesome. Its only purpose is to transport gas from the sea to the pipeline while ignoring Counties Galway and Mayo totally. More important, it bypasses Tuam in my constituency, which has been designated as a hub under the national spatial strategy. When the strategy was published, the Government stated all State and semi-State bodies were to take it into account in their planning. That remit has been ignored by Bord Gáis and the company is not implementing the Government's policy by not building a spur into Tuam. Mr. Walsh referred to his company's commercial remit but the national spatial strategy adopts different guidelines. It proposes the development of the country as a unit and Bord Gáis and similar organisations are expected to take that into account and do whatever they can to underpin the strategy. Unfortunately, the company is not taking it into account and I ask Mr. Walsh to examine his company's proposals and to at least include Tuam and demonstrate he is taking Government policy into account when developing national programmes.

Deputy Eamon Ryan

Will Mr. Walsh confirm the gas from the Corrib field is contracted for sale in the European market and not the domestic market?

Mr. Walsh

The difference between the Corrib pipeline and the others on the map is that it has not been built but the project is proceeding. With regard to spurs and so on, they are part of an evaluation under way between ourselves and the CER, which is the normal order of business.

Chairman

Who is building that pipeline?

Mr. Walsh

We are contracted to the producers of the Corrib gas field to build, own and operate that pipeline.

Chairman

Will Bord Gáis examine different spurs off that?

Mr. Walsh

: That is under evaluation. The pipe is unique in that it is not built.

Deputy Perry

Who has been commissioned to carry out the evaluation?

Mr. Walsh

It is being conducted jointly by ourselves and the CER, which is normal.

Deputy Perry

Will the findings be made public?

Mr. Walsh

Yes.

Deputy Perry

Will there be notification of the towns to be assessed? Will Sligo be considered?

Mr. Walsh

Towns close to the pipeline will be considered. Sligo is not close.

Deputy Perry

What is Mr. Walsh's definition of "close"?

Mr. Walsh

Less than 15 kilometres. That is the normal catchment area of a transmission pipeline but connection to a town is driven by the cost of getting there and the load there. If we undertake projects that do not fit the economics, everybody else on the system pays for them.

Chairman

The Minister may need to outline policy in this regard to the CER, which the committee can put to him at the next available opportunity.

With regard to the all-Ireland energy market, would it be feasible to extend the grid to the north west? Bord Gáis is doing business in the North. Would it be possible to extend a pipeline into the counties mentioned by members?

Are there restrictions on third parties entering the market and building pipelines?

Mr. Walsh

The regulator is carrying out a feasibility study regarding the north west. However, we are not part of that process and I am not sure what will be the outcome. That will be a comprehensive study.

Others can build pipelines into this area. Opportunities are available to pipeline developers to invest. We do not have a monopoly on the pipelines on the system.

Chairman

Would it be feasible to extend the grid to the north west?

Mr. Walsh

Our licensing is for Belfast-Derry, which has been built, and a connection between Belfast and Dublin.

Chairman

Would it be possible to build a pipeline between Derry and Letterkenny?

Mr. Walsh

That is the subject of an evaluation by the CER.

Chairman

Why is Bord Gáis not being consulted by the CER?

Mr. Walsh

It does its own economic evaluations of such projects.

Chairman

Has the commission consulted the company on this matter?

Mr. Walsh

No. That is normal.

Deputy Eamon Ryan

Is it correct that gas from the Corrib field has been contracted to France?

Mr. Walsh

No, that gas is in the domestic market.

Deputy Perry asked a question about Flogas. With regard to towns off the pipeline to the west, the regulator was anxious to get another player into the market and he held a competition. We were precluded from bidding and Flogas was the successful applicant. We have provided gas to the company to supply customers in Galway, Athlone, Mullingar, etc.

Deputy Perry

Flogas should be invited to make a submission regarding what it could do in the west. Is it an autonomous company working in the west?

Mr. Walsh

It supplies five or six towns.

Chairman

We will evaluate that suggestion when we consider the next phase. Is the company involved in electricity generation?

Mr. Walsh

No.

Chairman

But it is involved in the supply of electricity.

Mr. Walsh

Yes. We have more than 500 customers.

Chairman

Are you buying energy on the wholesale market?

Mr. Walsh

We are.

Chairman

Is it the company's intention to build a generating plant at some stage in the future?

Mr. Walsh

Our strategy is to develop a significant supply business. Depending on how the market develops, it sometimes requires a company to have its own generation if there is liquidity in the system. We have a supply focus rather than a generation focus. In other words, we are seeking liquid electricity so that we can sell it on to customers. We had an interest in generation in the past because we felt it was the only way we could secure our supplies. If there is liquidity in the market, we are not necessarily tied to generation.

Chairman

Did the company seek any opportunity to compete——

Mr. Walsh

Yes. Together with a partner, we competed in the competition at the end of 2003 and we were unsuccessful.

Chairman

Is it the company's intention to enter into any future competitions or has that been set aside?

Mr. Walsh

If there are generation opportunities that feed our supply business, we will be interested in examining them.

Chairman

I note in the presentation that the company will supply Tynagh Energy with its product. Is it the main supplier?

Mr. Walsh

We are providing the connection onto the transmission system.

Chairman

Would you supply the energy itself?

Mr. Walsh

That deal has not yet been done.

Chairman

How successful is the telecoms business? I am aware the company has a fibre cable with the main gas pipeline. Is this throughout the whole grid or is it just in parts of the grid?

Mr. Walsh

We have a relatively small investment in telecommunications. We have some fibre rings in the Dublin area, which were facilitated by the fact that we had gas pipes in the ground and so on. We installed a number of ducts with that pipeline to the west, namely, the one that goes from Dublin to Galway and heads south towards Ennis and Limerick.

Chairman

Has the company customers for it or is that fibre lit up?

Mr. Walsh

No. There is no fibre in the ducts.

Chairman

It is just duct?

Mr. Walsh

Yes.

Chairman

Is the company doing business in Northern Ireland?

Mr. Walsh

Yes.

Chairman

Are its charges in Northern Ireland the same as the charges in the Republic of Ireland?

Mr. Walsh

The tariffing in Northern Ireland is a bit different because the licence conditions, rates of return and so on are somewhat different.

Chairman

Has the company householders as customers?

Mr. Walsh

No.

Chairman

Who are its customers?

Mr. Walsh

We have afforestation at the end of the Belfast-Derry line.

Deputy Eamon Ryan

Has the company any intention of becoming involved in the billing area of electricity supply, which is currently being liberalised?

Mr. Walsh

We see billing, credit controls and so on as an integrated part of our supply business.

Deputy Eamon Ryan

Does the company intend to extend this into the electricity supply billing area?

Mr. Walsh

Yes.

Deputy Eamon Ryan

Will that happen this year or within the next two or three years?

Mr. Walsh

Perhaps towards the end of this year, but certainly thereafter. We have a strategic interest in electricity supply.

Deputy Eamon Ryan

On a nationwide basis, a customer might get a combined gas and electricity bill.

Mr. Walsh

Yes.

Chairman

This may be a matter for the board and, if so, that is fine. Is the business model the company, as a semi-State body, currently operates the future model for the company? Has the company discussed whether it is the model with which it will go forward?

Mr. Walsh

Yes. My understanding is that there is no intention of having any other model.

Chairman

I thank Mr. Walsh and his executives from Bord Gáis for appearing before the committee today. The presentation was very helpful and fruitful. We would like clarification on some of the information. A record of what has been discussed here today will be available on the website in a week or ten days when Mr. Walsh can consider what was said. I would like him to study the presentation made and the questions asked by members because there may be some additional information with which the committee can be provided. This would be very helpful to the committee in reaching a conclusion not just in regard to gas energy but also to the greater energy model we are currently examining. We may have to get back to Mr. Walsh with specific questions or we may decide to invite him back here to assist the committee in the future.

I take this opportunity to thank sincerely Mr. Walsh and his officials for appearing before the committee.

The joint committee went into private session at 4.48 p.m. and adjourned at 5.35 p.m. sine die.